3 Impactful Financial Tips for Landlords in 2023
Becoming a financially successful landlord in 2023 is difficult. Material costs, such as lumber, have risen dramatically over the past decade. Routine maintenance and repairs now cost more than ever. Landlords are also vulnerable to losing money when dealing with bad tenants. Evictions and ejectments are long legal processes that are expensive, all while the unit isn’t earning rental income. To combat the obstacles that landlords face, it’s important to have your processes dialed in financially.
Here are 3 impactful financial tips that landlords in 2023 can implement to help them keep more profits.
Protect Against Squatters
Squatters are a landlord’s worst nightmare. They can break into and occupy a vacant rental property for months, draining a property owner’s wallet. This guide on squatters outlines how to protect your house and get rid of them. Following this guide will help you avoid expensive squatter situations. Many landlords that are dealing with squatters will throw their hands up and sell the property outright. Ejecting a squatter is an arduous, stressful, and expensive process to go through.
Whenever you have a vacant rental property, always make sure that it’s secured by locks and an alarm system. Squatters target empty homes. If you encounter a squatter and try to get them out, familiarize yourself with the rights squatters have in your area. Giving them cash for keys is a common strategy to get them out. While it hurts at the moment to shell out cash, it can save you thousands of dollars down the road to get rid of the squatter now vs later.
When your rental property is empty, there is no rental income coming in. For landlords that own multi-family buildings, the other rented units can help offset the cost of vacancies. That is why some real estate investors prefer multi-unit buildings over single-family homes as investments. Either way, vacancies hurt your bottom line.
In 2023, people are coming off hardships and economic turbulence that they experienced over the past few years. People’s household incomes are tight right now, which is slimming down the demand in the rental market from prospective tenants. Take good care of your existing tenants in the hope that they stay for multiple years. Longstanding tenants help offset vacancy costs, which are one of the largest expenses for some landlords.
Consider Additional Rental Income Channels
Depending on where your rental property is located, you can consider short-term rental opportunities, like Airbnb. Surprisingly, some properties can generate much larger amounts of rental income through short-term rentals. A huge factor to determine this is the location of your property. If you own a house in a bustling downtown area of a city that people oftentimes travel to, it is likely a fantastic fit for Airbnb.
Look at your rental property through a different lens to help maximize its rental income potential. Savvy investors see a property with a large backyard and have visions of dollar signs. Depending on the laws in your county, you can build an ADU in the backyard and rent that out as well. This additional stream of rental income can make a huge difference to the profits that you keep in 2023 as a landlord. There are online tools, like Zillow or Redfin, that break down comps of rental property comps in your area. You can analyze the rental income numbers for ADUs and smaller units in your area to determine if it makes sense to build one on your own.